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Beef producers need to tune into consumers

With the percentage of income spent on food having dropped steadily for several years, farmers may be tempted to convince consumers it’s time to pay more for groceries.

But Brenda Schoepp, an Alberta-based market strategist and beef producer, doesn’t think that’s necessarily a good idea. Schoepp, who operates a consulting service BEEFLINK (www.beeflink.com) says the beef industry needs to catch up with consumer needs and shopping technology, and pay attention to niche-market opportunities.

“I think we should tap into what consumers are spending their money on and how they are buying,” Schoepp told a recent Cattleman’s Appreciation Dinner in St. Walburg, Sask. “So basically, if you don’t have a phone app for your business now, you’re dead in the water. If you can’t sell beef virtually, you’re done. I think we’re light years behind where we need to be to reach the consumer on the platform they’re comfortable with.”

Schoepp said 32 per cent of food in Europe is now bought using a cellphone. North American consumers can now buy meat online, too. An organic grocery site, EatIt.ca, sells rib-eye steaks at $41.77 per kilogram. Schoepp, who lives near the west-central Alberta community of Rimbey, had ribs delivered to her door through Amazon.com at a cost of $25 per pound.

One-third of grocery sales in Canada are ethnic and Costco’s biggest selling meat product is Korean ribs. Despite this market opportunity, Schoepp said there is only one federally inspected plant in Canada that processes Korean ribs.

Schoepp sees meeting the customers’ needs is key in export markets, too. In September 2010, Coles, an Australian retailer, announced it would only accept beef free of growth hormones. Though initially controversial, the move helped Australia access the European Union market.

“I really admire the way Australians quickly adapt and say, ‘OK, we have a country that’s dependent on trade — if that’s what the client wants, that’s what we’ll do,’” said Schoepp.

Smaller markets important

Canada’s domestic beef market is dropping, leaving ranchers more vulnerable to export market retractions, Schoepp said. Canada can’t keep relying on the United States to soak up beef exports, either.

“For the first time in history, the United States of America became a net exporter of beef rather than a net importer of beef,” she said. In the U.S., ground beef is the only beef product moving domestically, due to the weak economy, so other meat cuts are exported. U.S. beef imports into Canada have been increasing.

Schoepp says smaller export markets are important, especially markets like China that will take byproducts such as hide, tallow, and offal.

“For us to get our tallow moving into China is a really big deal,” she said. “The overall agreement is larger than that, but we’re starting with the tallow, and that’s very, very important because it’s a high-end credit that allows the packing industry to spin off and stay in the game.”

Schoepp sees lots of opportunity in Russia, which is looking for seedstock. Mexico is also an important market, as it buys Canada’s chucks. Schoepp sees a need to find more markets for, and more ways to package, the whole carcass.

Demand for light feeders

Schoepp expects light feeder prices to stay strong for now. She estimates the industry will be short up to 600,000 head between now and 2014, which should keep light fed-cattle prices strong. Cull cow prices are expected to stay strong as well.

A quick market retraction dropped heavy feeder prices recently, and Schoepp thinks prices will stay low for now. She adds prices may pop up briefly in June.

Looking at seasonal demands, she says “two big market drivers of Canadian beef are golf courses and the Calgary Stampede. When they buy, they buy during the last week of May and the front end of June.”

Consumers/retailers drive change

Ultimately, producers’ wealth comes from consumers, Schoepp said. Consumers and retailers will drive industry change as well.

“Sobeys this year, at the National Farm Animal Care Convention, said the days of producer-driven initiatives are over,” said Schoepp. “And that’s a pretty strong statement from a major retailer of beef in Canada, saying that ‘We (Sobeys) will drive the animal-care initiatives in this country.’” †

About the author

Field Editor

Lisa Guenther

Lisa Guenther is field editor for Grainews based at Livelong, Sask. You can follow her on Twitter @LtoG.

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